waiting on investor approval, BOA is the investor/1st lienholder

My question is, what are the loss percentage thresholds that each level approver (the negotiator, the team leader, the dept. mgr) can approve? I had read these somewhere, i.e. "the negotiator can approve a loss up to x%, the team leader can approve up to y%, anything over that needs manager approval...". Can someone tell me these percentages?

If it is of any interest, I am the buyer in a short sale, under contract since January, BOA 1st lien, Citi 2nd. BOA approved our purchase price (after they countered and we held firm) and submitted for investor approval 2 weeks ago. They still have not sorted out the payment to Citi, who is looking for 15k. BOA offered 3k but Citi is holding firm. Recovery for BOA should be high, I'm approximating around 85-90% at the very least (and that's if they give the full 15k to Citi) so I would think that this should be a no-brainer, but BOA has not acted logically throughout this whole process so who knows. Basically I am considering escalating this up to some more senior BOA people and explaining that it's in their best interest to approve ASAP. This home is in NJ and every month that they waste is adding another $1k in unpaid property taxes that will have to be satisfied from the sale proceeds. Sellers are bankrupt and have abandoned the property, haven't paid the mtge in well over a year.

Replies to This Discussion

The only favor being done is that the investor (not always the bank) is even considers a short sale. Try this metaphor:

A person buys a new car on credit. They fall behind on their payments, so they sell the car to you for less than what they owe. Know of any credit companies that would say, "Well, ok, I guess a favor was being done for us?" Heck no, they want their car back!

Homes are more important than cars in the whole "food, clothing, shelter" scheme, and investors keep that in mind, offering the short sale as an alternative to the repo man showing up the next day. Still, investors aren't in the business to lose money, so they weigh a myriad of factors--cost of foreclosure vs. loss on the short sale, the ratio of the amount of sale vs. the unpaid principal balance and other stuff they keep secret and ever morphing.

Sorry, but if you are a buyer, you are doing as much of a "favor" in a short sale as when buying a property the seller owns free and clear. Granted, the short sale is more complicated and requires more time, and the selling agent will appreciate and counsel your patience.

Unless the loan is delegated, neither the negotiator, team lead, dept. mgr. or even the CEO can approve the offer amount--they can only suggest it to the investor for investor approval. Same with the second.

"85-90%" has no meaning out of context. 85% of market value, principal value remaining; does that factor in the $1k in taxes added each month? (Taxes trump everything.) Perhaps BOA has not acted "logically," but they have acted rationally (or the other way around). The short sale is a process, the process does work, but to try to force your logic onto a system so externally and internally regulated can be likened to tilting at windmills.

BOA is the 1st lienholder and also the investor in this case. So they have the final say. Sale price is 420k, BOA is owed 350k principal. At the sale price, they will recover 100% of the principal owed to them, and almost all back interest and fees owed to them, after paying out the taxes. Their ultimate recovery will depend on what they pay to the 2nd lienholder, and how many more months go by accruing taxes but as I said, it should be very high. We are at 8 months now of waiting, that is an additional 8k in property taxes that BOA now has to pay out. 8k that they would have recovered if they approved right away.

The alternative for them is to foreclose. They have not started this process, so figure a few more months of property taxes get added before they take possession. Then what? They have pay off the taxes and re-list the house. A near identical house next door just sold last week for 430k, the one we are buying has been neglected for over a year and needs septic work so I can't see it possibly going for any more than our offer of 420k.

Do you see my point? They are not taking a massive hit on this house, this isn't a 50% off short sale.

Jerry A. Ringo said:

"85-90%" has no meaning out of context. 85% of market value, principal value remaining; does that factor in the $1k in taxes added each month? (Taxes trump everything.) Perhaps BOA has not acted "logically," but they have acted rationally (or the other way around). The short sale is a process, the process does work, but to try to force your logic onto a system so externally and internally regulated can be likened to tilting at windmills.

Bank of America usually holds firm on their offer to 2nds in our experience. If someone gets BOA to pay $15k to a 2nd I'd love to hear about it. If citi isn't negotiating either the only option I see is coming to the table with $12k cash to Citi. If you don't want to pay more than $420k then withdraw and resubmit the offer $12k less. If a bpo hasn't been done in the past 3 months they more than likely will have to do another one so there's a chance the new value may come in less (esp. if list agent does their part in informing bank/bpo on the issues with the property). However, you did say the previous owners are bankrupt. I don't know the laws in NJ but if they filed bankruptcy you may have a bigger problem.

Good to bring up some of your points to consider - not so good if you are looking at the real world. If you think for 1 second BofA or the investor is doing anything as a "favor", you haven't been looking at the economics. They are not being "nice guys", they are trying to minimize their own damage. Please don't try to paint them as moral angels, they are way on the other side of that.

On the other hand, don't try to use financial logic with the biggest investors - they are gov't, they don't care - it isn't their money and after doing several short sales, you will have plenty of proof that they are not doing the best for the taxpayers. Hmm. I guess I'm saying, they don't do things to be nice, they don't care that the tax payer is getting a worse deal because they won't take 20 seconds to make a rational decision, and BofA doesn't care because they are paid just to process - tain't their money - the longer the account sits, the more money they make regardless of the investor losing hand over fist. There is a lot of "don't care" in there and I have found zero management - so, they meander and do what they want - and hold onto those accounts as long as possible.

Jerry A. Ringo said:

The only favor being done is that the investor (not always the bank) is even considers a short sale. Try this metaphor:

A person buys a new car on credit. They fall behind on their payments, so they sell the car to you for less than what they owe. Know of any credit companies that would say, "Well, ok, I guess a favor was being done for us?" Heck no, they want their car back!

Homes are more important than cars in the whole "food, clothing, shelter" scheme, and investors keep that in mind, offering the short sale as an alternative to the repo man showing up the next day. Still, investors aren't in the business to lose money, so they weigh a myriad of factors--cost of foreclosure vs. loss on the short sale, the ratio of the amount of sale vs. the unpaid principal balance and other stuff they keep secret and ever morphing.

Sorry, but if you are a buyer, you are doing as much of a "favor" in a short sale as when buying a property the seller owns free and clear. Granted, the short sale is more complicated and requires more time, and the selling agent will appreciate and counsel your patience.

Unless the loan is delegated, neither the negotiator, team lead, dept. mgr. or even the CEO can approve the offer amount--they can only suggest it to the investor for investor approval. Same with the second.

"85-90%" has no meaning out of context. 85% of market value, principal value remaining; does that factor in the $1k in taxes added each month? (Taxes trump everything.) Perhaps BOA has not acted "logically," but they have acted rationally (or the other way around). The short sale is a process, the process does work, but to try to force your logic onto a system so externally and internally regulated can be likened to tilting at windmills.

Both the banks held firm for a while, the seller decided to order an appraisal to show that our offer was the best they could possibly get. Appraisal came back around 30k less than our offer. We signed one final extension and gave the banks a deadline for a final yes/no. The deadline came and went, so I terminated the agreement. I got a copy of the HUD-1, there was only a very, very small amount owed in taxes. BOA was owed 350k principal, they were getting 371k if they would have agreed to pay Citi the 10%, or 15k. BOA could have gotten back full loan amount plus 21k. Instead they kept pushing for the extra 12k. Now they get nothing from us. I expect to see this house on the auction block soon. As for me, I am looking elsewhere now - I don't think I will waste my time with another short sale. Our offer would have been a good deal 8 months ago, but prices are still in freefall and we would have been overpaying now....thankfully BOA is completely inept and took so long!

In many cases, having the stamina to put up with a BofA can prove worthwhile - most people walk away at the sign of any work - like having to change the batteries in the remote.

If this was a serious good deal for you before, the values have gone down, BofA (really, don't forget, the investor) has paid more taxes while it sat, maybe you should consider going in with a lower offer. You already have an appraisal for less, you've done a lot of the work on this. Maybe even as a "throw-away" - don't offer so much and don't work so hard and see if it falls your way.

1st BofA doesn't care; 2nd if the investor is fannie mae, they are totally out to lunch - don't care; 3rd a looonngg time w/o payment has some effect on BofA because someone at fannie mae looks at the huge picture - not individual files but overall response so as something hangs around, it starts showing up on radars EVENTUALLY; 4th the "negotiator" can be someone who cannot work them complicated picture buttons at mcdonalds to someone who can spell negotiate to someone who actually wants to do short sales - majority just go through the motions so yours was probably a useless one; 5th by restarting, you have a chance at getting a real negotiator who sees the value in working out a solution.

But, that is if this really was a good deal and is now a better one. Sort of like "better the devil you know" in a restart..

Just a thought..

George P said:

Follow up - Both the banks held firm for a while, the seller decided to order an appraisal to show that our offer was the best they could possibly get. Appraisal came back around 30k less than our offer. We signed one final extension and gave the banks a deadline for a final yes/no. The deadline came and went, so I terminated the agreement. I got a copy of the HUD-1, there was only a very, very small amount owed in taxes. BOA was owed 350k principal, they were getting 371k if they would have agreed to pay Citi the 10%, or 15k. BOA could have gotten back full loan amount plus 21k. Instead they kept pushing for the extra 12k. Now they get nothing from us. I expect to see this house on the auction block soon. As for me, I am looking elsewhere now - I don't think I will waste my time with another short sale. Our offer would have been a good deal 8 months ago, but prices are still in freefall and we would have been overpaying now....thankfully BOA is completely inept and took so long!

Members

Badge

Short Sale Superstars, LLC and www.ShortSaleSuperstars.com does not necessarily endorse the real estate agents, loan officers, attorneys, real estate brokers and other participants listed on this site. These real estate profiles, blogs, blog entries and forums are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a short sale. Short Sale Superstars, LLC takes no responsibility for the content on these pages that are written by the members of this community.